Intrinsic value of PTC Inc. - PTC

Previous Close

$83.90

  Intrinsic Value

$46.50

stock screener

  Rating & Target

sell

-45%

Previous close

$83.90

 
Intrinsic value

$46.50

 
Up/down potential

-45%

 
Rating

sell

We calculate the intrinsic value of PTC stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 10.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
  5.76
  5.68
  5.62
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
  5.24
  5.21
  5.19
Revenue, $m
  1,355
  1,473
  1,595
  1,723
  1,855
  1,993
  2,136
  2,285
  2,439
  2,600
  2,767
  2,941
  3,122
  3,311
  3,507
  3,712
  3,926
  4,149
  4,382
  4,626
  4,880
  5,146
  5,424
  5,715
  6,019
  6,338
  6,672
  7,021
  7,388
  7,771
Variable operating expenses, $m
  777
  833
  891
  951
  1,013
  1,078
  1,146
  1,216
  1,289
  1,365
  1,305
  1,387
  1,473
  1,562
  1,654
  1,751
  1,852
  1,957
  2,067
  2,182
  2,302
  2,427
  2,558
  2,695
  2,839
  2,989
  3,147
  3,312
  3,484
  3,665
Fixed operating expenses, $m
  464
  474
  485
  495
  506
  517
  529
  540
  552
  564
  577
  589
  602
  616
  629
  643
  657
  672
  686
  702
  717
  733
  749
  765
  782
  799
  817
  835
  853
  872
Total operating expenses, $m
  1,241
  1,307
  1,376
  1,446
  1,519
  1,595
  1,675
  1,756
  1,841
  1,929
  1,882
  1,976
  2,075
  2,178
  2,283
  2,394
  2,509
  2,629
  2,753
  2,884
  3,019
  3,160
  3,307
  3,460
  3,621
  3,788
  3,964
  4,147
  4,337
  4,537
Operating income, $m
  114
  166
  220
  277
  336
  397
  462
  528
  598
  671
  885
  964
  1,047
  1,134
  1,224
  1,318
  1,417
  1,521
  1,629
  1,742
  1,861
  1,986
  2,117
  2,254
  2,398
  2,549
  2,708
  2,875
  3,050
  3,234
EBITDA, $m
  302
  358
  417
  478
  542
  609
  679
  751
  826
  905
  987
  1,073
  1,162
  1,256
  1,353
  1,455
  1,562
  1,673
  1,790
  1,913
  2,041
  2,176
  2,317
  2,465
  2,620
  2,783
  2,954
  3,133
  3,322
  3,520
Interest expense (income), $m
  0
  39
  47
  56
  64
  74
  83
  93
  103
  114
  125
  136
  148
  161
  173
  187
  201
  216
  231
  247
  263
  281
  299
  318
  338
  359
  380
  403
  427
  452
  478
Earnings before tax, $m
  74
  118
  164
  212
  262
  314
  369
  425
  485
  546
  749
  816
  887
  960
  1,037
  1,117
  1,202
  1,290
  1,382
  1,479
  1,581
  1,687
  1,799
  1,916
  2,040
  2,169
  2,305
  2,448
  2,598
  2,756
Tax expense, $m
  20
  32
  44
  57
  71
  85
  100
  115
  131
  148
  202
  220
  239
  259
  280
  302
  324
  348
  373
  399
  427
  456
  486
  517
  551
  586
  622
  661
  701
  744
Net income, $m
  54
  86
  120
  155
  191
  229
  269
  311
  354
  399
  547
  596
  647
  701
  757
  816
  877
  942
  1,009
  1,080
  1,154
  1,232
  1,313
  1,399
  1,489
  1,583
  1,683
  1,787
  1,896
  2,012

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,542
  2,763
  2,993
  3,232
  3,481
  3,739
  4,008
  4,286
  4,576
  4,878
  5,192
  5,518
  5,858
  6,212
  6,581
  6,965
  7,366
  7,785
  8,222
  8,679
  9,156
  9,655
  10,177
  10,722
  11,294
  11,892
  12,518
  13,173
  13,860
  14,580
Adjusted assets (=assets-cash), $m
  2,542
  2,763
  2,993
  3,232
  3,481
  3,739
  4,008
  4,286
  4,576
  4,878
  5,192
  5,518
  5,858
  6,212
  6,581
  6,965
  7,366
  7,785
  8,222
  8,679
  9,156
  9,655
  10,177
  10,722
  11,294
  11,892
  12,518
  13,173
  13,860
  14,580
Revenue / Adjusted assets
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
  0.533
Average production assets, $m
  848
  922
  999
  1,078
  1,161
  1,248
  1,337
  1,430
  1,527
  1,628
  1,732
  1,841
  1,954
  2,073
  2,196
  2,324
  2,458
  2,598
  2,743
  2,896
  3,055
  3,221
  3,395
  3,578
  3,768
  3,968
  4,177
  4,395
  4,625
  4,865
Working capital, $m
  -423
  -460
  -498
  -538
  -579
  -622
  -666
  -713
  -761
  -811
  -863
  -918
  -974
  -1,033
  -1,094
  -1,158
  -1,225
  -1,295
  -1,367
  -1,443
  -1,523
  -1,606
  -1,692
  -1,783
  -1,878
  -1,978
  -2,082
  -2,191
  -2,305
  -2,425
Total debt, $m
  775
  913
  1,057
  1,206
  1,361
  1,522
  1,690
  1,864
  2,045
  2,233
  2,428
  2,632
  2,844
  3,065
  3,295
  3,535
  3,785
  4,047
  4,319
  4,604
  4,902
  5,213
  5,539
  5,880
  6,236
  6,609
  7,000
  7,409
  7,838
  8,287
Total liabilities, $m
  1,586
  1,724
  1,868
  2,017
  2,172
  2,333
  2,501
  2,675
  2,856
  3,044
  3,240
  3,443
  3,655
  3,876
  4,106
  4,346
  4,597
  4,858
  5,131
  5,416
  5,713
  6,025
  6,350
  6,691
  7,047
  7,420
  7,811
  8,220
  8,649
  9,098
Total equity, $m
  956
  1,039
  1,125
  1,215
  1,309
  1,406
  1,507
  1,612
  1,721
  1,834
  1,952
  2,075
  2,203
  2,336
  2,474
  2,619
  2,770
  2,927
  3,092
  3,263
  3,443
  3,630
  3,826
  4,032
  4,246
  4,471
  4,707
  4,953
  5,211
  5,482
Total liabilities and equity, $m
  2,542
  2,763
  2,993
  3,232
  3,481
  3,739
  4,008
  4,287
  4,577
  4,878
  5,192
  5,518
  5,858
  6,212
  6,580
  6,965
  7,367
  7,785
  8,223
  8,679
  9,156
  9,655
  10,176
  10,723
  11,293
  11,891
  12,518
  13,173
  13,860
  14,580
Debt-to-equity ratio
  0.810
  0.880
  0.940
  0.990
  1.040
  1.080
  1.120
  1.160
  1.190
  1.220
  1.240
  1.270
  1.290
  1.310
  1.330
  1.350
  1.370
  1.380
  1.400
  1.410
  1.420
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.500
  1.500
  1.510
Adjusted equity ratio
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  54
  86
  120
  155
  191
  229
  269
  311
  354
  399
  547
  596
  647
  701
  757
  816
  877
  942
  1,009
  1,080
  1,154
  1,232
  1,313
  1,399
  1,489
  1,583
  1,683
  1,787
  1,896
  2,012
Depreciation, amort., depletion, $m
  188
  193
  197
  202
  207
  212
  217
  222
  228
  234
  102
  108
  115
  122
  129
  137
  145
  153
  161
  170
  180
  189
  200
  210
  222
  233
  246
  259
  272
  286
Funds from operations, $m
  243
  279
  317
  357
  398
  441
  486
  533
  582
  633
  649
  704
  762
  823
  886
  952
  1,022
  1,094
  1,170
  1,250
  1,334
  1,421
  1,513
  1,609
  1,711
  1,817
  1,928
  2,045
  2,169
  2,298
Change in working capital, $m
  -35
  -37
  -38
  -40
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -57
  -59
  -61
  -64
  -67
  -70
  -73
  -76
  -79
  -83
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -120
Cash from operations, $m
  278
  316
  355
  396
  439
  484
  531
  579
  630
  683
  701
  758
  819
  882
  947
  1,016
  1,088
  1,164
  1,243
  1,326
  1,413
  1,504
  1,600
  1,700
  1,806
  1,916
  2,032
  2,154
  2,283
  2,418
Maintenance CAPEX, $m
  -46
  -50
  -54
  -59
  -63
  -68
  -73
  -79
  -84
  -90
  -96
  -102
  -108
  -115
  -122
  -129
  -137
  -145
  -153
  -161
  -170
  -180
  -189
  -200
  -210
  -222
  -233
  -246
  -259
  -272
New CAPEX, $m
  -70
  -74
  -77
  -80
  -83
  -86
  -90
  -93
  -97
  -101
  -105
  -109
  -113
  -118
  -123
  -128
  -134
  -140
  -146
  -152
  -159
  -166
  -174
  -182
  -191
  -200
  -209
  -219
  -229
  -240
Cash from investing activities, $m
  -116
  -124
  -131
  -139
  -146
  -154
  -163
  -172
  -181
  -191
  -201
  -211
  -221
  -233
  -245
  -257
  -271
  -285
  -299
  -313
  -329
  -346
  -363
  -382
  -401
  -422
  -442
  -465
  -488
  -512
Free cash flow, $m
  162
  192
  224
  258
  293
  330
  368
  408
  449
  493
  500
  548
  597
  649
  702
  759
  818
  880
  944
  1,012
  1,083
  1,158
  1,236
  1,318
  1,404
  1,495
  1,590
  1,690
  1,795
  1,905
Issuance/(repayment) of debt, $m
  132
  138
  143
  149
  155
  161
  167
  174
  181
  188
  196
  204
  212
  221
  230
  240
  250
  261
  273
  285
  298
  311
  326
  341
  356
  373
  391
  409
  429
  449
Issuance/(repurchase) of shares, $m
  27
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  159
  138
  143
  149
  155
  161
  167
  174
  181
  188
  196
  204
  212
  221
  230
  240
  250
  261
  273
  285
  298
  311
  326
  341
  356
  373
  391
  409
  429
  449
Total cash flow (excl. dividends), $m
  321
  330
  368
  407
  448
  491
  535
  582
  630
  681
  696
  751
  809
  869
  933
  999
  1,068
  1,141
  1,217
  1,297
  1,381
  1,469
  1,562
  1,659
  1,761
  1,868
  1,981
  2,099
  2,224
  2,354
Retained Cash Flow (-), $m
  -81
  -83
  -86
  -90
  -93
  -97
  -101
  -105
  -109
  -113
  -118
  -123
  -128
  -133
  -139
  -145
  -151
  -157
  -164
  -172
  -179
  -188
  -196
  -205
  -215
  -225
  -235
  -247
  -258
  -271
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  239
  247
  281
  317
  355
  394
  434
  477
  521
  567
  578
  629
  681
  736
  794
  854
  917
  983
  1,053
  1,125
  1,202
  1,282
  1,366
  1,454
  1,546
  1,643
  1,745
  1,853
  1,965
  2,084
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  229
  226
  245
  261
  275
  286
  293
  298
  299
  297
  275
  268
  259
  247
  233
  217
  200
  181
  162
  143
  124
  106
  89
  74
  60
  48
  37
  29
  21
  16
Current shareholders' claim on cash, %
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7
  99.7

PTC Inc. is a global computer software and services company. The Company offers a portfolio of computer-aided design (CAD) modeling, product lifecycle management (PLM) and service lifecycle management (SLM) solutions for manufacturers to create, operate, and service products. It offers a suite of Internet of Things (IoT) solutions that enables its customers to connect, manage and analyze data, and create applications. Its segments include the Solutions Group, the IoT Group and Professional Services. The Solutions Group segment includes its CAD, PLM and SLM products. The IoT Group segment includes its IoT, analytics and augmented reality (AR) solutions. The Professional Services segment includes consulting, implementation and training business. Its IoT products include ThingWorx, KEPServerEX, Vuforia Studio and Vuforia. Its CAD products include Creo and Mathcad. Its PLM products include Windchill, Integrity, Navigate and Creo View. Its SLM products include Servigistics and Arbortext.

FINANCIAL RATIOS  of  PTC Inc. (PTC)

Valuation Ratios
P/E Ratio 1612.7
Price to Sales 8.3
Price to Book 10.9
Price to Tangible Book
Price to Cash Flow 71.7
Price to Free Cash Flow 88
Growth Rates
Sales Growth Rate 2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.8%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 80.5%
Total Debt to Equity 80.5%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.3%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0.7%
Return On Equity - 3 Yr. Avg. -0%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 71.7%
Gross Margin - 3 Yr. Avg. 72.2%
EBITDA Margin 7.4%
EBITDA Margin - 3 Yr. Avg. 6%
Operating Margin 3.5%
Oper. Margin - 3 Yr. Avg. 1.2%
Pre-Tax Margin -0.1%
Pre-Tax Margin - 3 Yr. Avg. -1.3%
Net Profit Margin 0.5%
Net Profit Margin - 3 Yr. Avg. -0.1%
Effective Tax Rate 700%
Eff/ Tax Rate - 3 Yr. Avg. 213.9%
Payout Ratio 0%

PTC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTC stock intrinsic value calculation we used $1242 million for the last fiscal year's total revenue generated by PTC Inc.. The default revenue input number comes from 0001 income statement of PTC Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our PTC stock valuation model: a) initial revenue growth rate of 9.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PTC is calculated based on our internal credit rating of PTC Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of PTC Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of PTC stock the variable cost ratio is equal to 58.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $454 million in the base year in the intrinsic value calculation for PTC stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.1% for PTC Inc..

Corporate tax rate of 27% is the nominal tax rate for PTC Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the PTC stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for PTC are equal to 62.6%.

Life of production assets of 17 years is the average useful life of capital assets used in PTC Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for PTC is equal to -31.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $874.589 million for PTC Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 118.640 million for PTC Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of PTC Inc. at the current share price and the inputted number of shares is $10.0 billion.

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